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# 90028-ass-2010

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```									                                NCEA Level 1 Accounting (90028) 2010 — page 1 of 6

Assessment Schedule – 2010
Accounting: Analyse and interpret information for a sole proprietor(s) (90028)
Evidence Statement

Question                                          Evidence                                            Code

ONE
(a)            Analysis Measure            2009        2010

Mark-up %                                                                               A
150%

Gross profit %                     75%
A
% Change in sales                          –6.3%
A

Note: Accept –6.25% for % change in sales, must have negative indicated (could use
brackets).

(b)     An interpret answer will explain using the elements of the formula with no specific          I
reference to 60% (or 60 cents)                                                              or
The percentage of sales (percentage / cents of each sales \$) that is gross profit / For
every dollar of sales the amount that is gross profit

A fully interpret answer will explain using context in their answer giving specific
F
reference to the meaning of 60% AND Sophie’s Sweet Store / Sophie
60% of sales from Sophie’s Sweet Store (60 cents in every dollar of sales) is gross
profit (before allowing for operating expenses in the period).

(c)     An interpret answer will describe using elements of the formula                              I
    the amount added to the cost of goods to get the selling price OR                      or
    an example given, eg Sweets that cost \$1 would be sold for \$4

A fully interpret answer will explain using a context to the answer giving specific         F
reference to the meaning of adding 300% of the cost price to get the selling price AND
Sophie’s Sweet Store / Sophie
    Sophie’s Sweet Store adds 300% of the cost price onto the cost of the goods /
inventory before they are sold calculated.
    An example given, eg Sweets that cost Sophie’s Sweet Store \$1 would be sold by
Sophie’s Sweet Store for \$4.

(d)     An interpret answer will give a reason for the trend                                         I
There has been an increase in the cost of goods sold / there has been a (deliberate)        or
decrease in the mark-up / selling price / more discount sales / there has been some loss
of inventory

A fully interpret answer will refer to Sophie’s Sweet Store /Sophie and explain the
F
reason for the trend
    Sophie’s Sweet Store decreased their mark-up, which decreased their gross profit
decreasing gross profit percentage.
    Sophie’s Sweet Store had increased cost of goods sold /(rising supplier prices or
loss of inventory), which has decreased the gross profit decreasing gross profit
percentage.
NCEA Level 1 Accounting (90028) 2010 — page 2 of 6

Question                                           Evidence                                           Code

ONE      An interpret answer will make a recommendation
(e)        Decrease their mark-up                                                                      I
   Change to a cheaper supplier                                                               or
 Change the sales mix
A fully interpret answer will refer to Sophie’s Sweet Store / Sophie and justify a
recommendation
   Sophie’s Sweet Store could decrease their mark-up, decreasing their selling price
and increasing their sales.
   Sophie’s Sweet Store could change to a cheaper supplier, decreasing their selling          F
price and increasing their sales.
   Sophie’s Sweet Store could increase their spending on advertising, which
encourages more customers and increases sales.

Judgement Statement – Question One
Achievement                    Achievement with Merit             Achievement with Excellence
including 1 A and 1 I / F             including 1 A, 1 I and 1 F              including 1 A and 2 F
NCEA Level 1 Accounting (90028) 2010 — page 3 of 6

Question                                           Evidence                                           Code

TWO
Analysis Measure                     2009                         2010
(a)
Distribution costs %                              27%                        20%
A
Finance costs %                                     2%                       10%
A
Net profit %                                      35%                        25%        A

(b)      An interpret answer will explain using the elements of the formula with no specific          I
reference to 35% (or 35 cents)                                                              or
The percentage of sales (percentage / cents of each sales \$) that is net profit / For
every dollar of sales, the amount that is net profit / Profit for the year

A fully interpret answer will explain using context in their answer giving specific         F
reference to the meaning of 35% AND Sophie’s Sweet Store / Sophie.
35% of sales from Sophie’s Sweet Store (35 cents in every dollar of sales) is net profit
/ remains in the business as profit after all expenses have been paid.

(c)     An interpret answer will give a reason for the trend
Eg There has been an increase in the interest rate / there has been an increase in           I
borrowings (loan or mortgage).                                                              or

A fully interpret answer will refer to Sophie’s Sweet Store / Sophie and fully explain a
reason for the trend                                                                        F
     Sophie’s Sweet Store increased their borrowings which increased their interest
expense / finance costs, increasing finance cost percentage
     There has been an increase in the interest rate, which has increased the interest
expense / finance costs, increasing finance cost percentage for Sophie’s Sweet
Store.
NCEA Level 1 Accounting (90028) 2010 — page 4 of 6

Question                                            Evidence                                           Code

TWO       An interpret answer will give a reason for the trend                                         I
(d)      Eg There has been a decrease in advertising (or any relevant example of a                   or
distribution cost / accept sales wages but NOT wages).

A fully interpret answer will refer to Sophie’s Sweet Store / Sophie and fully explain a    F
reason for the trend
   Sophie’s Sweet Store decreased their advertising (or any relevant distribution
cost but not wages), which decreased their distribution costs decreasing
distribution cost percentage.

(e)      An interpret answer will make a recommendation                                               I
Eg She could decrease their expenses / change to a cheaper supplier / increase their        or
mark-up.

A fully interpret answer will justify a recommendation                                      F
   Sophie’s Sweet Store could spending less on telephone (or any relevant expense
eg pay off their loan to decrease interest) decreasing their expenses and
increasing their net profit / net profit percentage.
   Sophie’s Sweet Store could change to a cheaper supplier, cost of goods sold will
decrease/gross profit will increase, increasing their net profit / net profit
percentage.
   Sophie’s Sweet Store could increase their mark-up, gross profit could increase,
increasing their net profit / net profit percentage.

Judgement Statement – Question Two
Achievement                  Achievement with Merit              Achievement with Excellence
including 1 A                    including 1 A ,1 I                        including 1 A
and 1 I / F                         and 1 F                                 and 2 F
NCEA Level 1 Accounting (90028) 2010 — page 5 of 6

Question                                             Evidence                                                 Code

THREE
(a)                                                                2010
Current ratio                                  2:1
A
Liquid ratio                                 1.5:1                           A
A
Equity ratio                                 0.2:1

(b)      An interpret level answer will explain using the elements of the formula                             I
Eg She has enough current assets to cover her current liabilities                                   or
She has \$2.60 of current assets to meet every \$1 of current liabilities
A fully interpret level answer will apply the 2.6:1 and use the context
Eg Sophie’s Sweet Store/Sophie has \$2.60 of current assets to meet every \$1 of their                F
current debt with which means that they do have / should have the ability to meet the
current debts

(c)      An interpret level answer will suggest a change in a component of the ratio                          I
Eg The owner / withdrew cash from the business / paid back a long term loan / purchased             or
property plant and equipment for cash (or on short term credit) / Purchase inventory on
credit.

A fully interpret level will refer to Sophie or Sophie’s Sweet Store and will include the result    F
of the transaction. Accept liquid / quick or immediate assets
   Sophie withdrew cash from the business, which decreases bank / decreasing
immediate assets and liquid ratio.
   Sophie’s Sweet Store paid back a long-term loan, which decreases bank / decreasing
immediate assets and liquid ratio.
   Sophie’s Sweet Store purchased property plant and equipment for cash, which
decreases bank / decreasing immediate assets and liquid ratio (or on credit increasing
immediate liabilities and decreasing liquid ratio).

(d)      An interpret level answer will explain using the elements of the formula                             I
Eg The percentage / proportion of assets contributed by the owner                                   or

A fully interpret level answer will apply the 0.3:1 and use the context
F
Eg for every \$1 of assets, Sophie has contributed 30 cents, meaning she has funded less
of the business assets than the outsiders
Note: Do not accept controls or owns.

(e)      An interpret answer will make a recommendation                                                       I
Eg She could invest more cash / could invest property, plant or equipment / She pays back           or
a loan / Increase in profit (Not decrease in drawings)

A fully interpret answer will refer to Sophie or Sophie’s Sweet Store and justify a                 F
recommendation
   Sophie could invest more cash (into the business), which would increase bank / equity,
increasing the equity ratio.
   Sophie could invest (property, plant or equipment) into the business, which would
increase equity increasing the equity ratio.
   Sophie’s Sweet Store pays off a loan, which reduces the liabilities and increases the
equity ratio.
NCEA Level 1 Accounting (90028) 2010 — page 6 of 6
Judgement Statement – Question Three
Achievement               Achievement with Merit            Achievement with Excellence